Sales slide further at Asda

Asda now trails UK market leader Tesco in annual revenue and is battling with Sainsbury’s to be Britain’s number two grocer.

In May, Asda revealed a 3.9% fall in sales at its established stores for the 15 weeks to 19 April – the Walmart-owned chain’s worst sales figures since the 1990s.

In June Sainsbury’s posted a sixth straight quarter of falling underlying sales but said it believed that its strategy was working.

However Mr Clarke said the supermarket was already seeing “green shoots” in its third quarter, and insisted it retained the support and understanding of US parent company Wal-Mart.

He said the sales performance had been hit by “short term tactics” by rivals.

Sainsbury’s (LON:SBRY) is extending its price matching scheme to online orders from tomorrow, the retailer has announced. However, it stopped comparisons with Tesco last October, arguing that Asda was seen as the benchmark on price.

And analysts say Asda has reduced prices without getting the boost to volume it was looking for, partly reflecting a difficulty in attracting new customers, especially more upmarket ones.

The supermarket giant said customers will receive a confirmation that their online branded basket was cheaper at Sainsbury’s.

British consumers are now shopping around more for the best prices, buying little and often and increasingly opting for convenience stores or online shopping rather than large out-of-town sites.

Asda has suffered a huge blow in its attempts to keep up with its rival after reporting a big fall in sales.

Alex Russo, Asda’s chief financial officer, said that the cost was likely to push prices higher. He said Asda “won’t get sidetracked by the short-term fixes that are saturating the supermarket industry”.

Wal-Mart, meanwhile, reported weaker than expected quarterly earnings and lowered its full-year forecast.